The following are 21 signs that this could
be a long, hot, crazy summer for the global financial system....
#1 There are rumors that major financial
institutions are cancelling employee vacations in anticipation of a major
financial crisis this summer. The following are a couple of tweets quoted
in a recent article by Kenneth
Schortgen Jr....
Todd Harrison
tweet: Hearing (not confirmed) @PIMCO asked employees to cancel
vacations to have "all hands on deck" for a Lehman-type tail event.
Confirm?
Todd M.
Schoenberger tweet: @todd_harrison @pimco I heard the same thing,
but I also heard the same for "some" at JPM. Heard it today at a
hedge fund luncheon.
As Schortgen points out,
these are not just your average Twitter users....
Todd Harrison is the CEO of the award
winning internet media company Minyanville, while Todd Shoenberger is a
managing principal at the Blackbay Group, and an adjunct professor of Finance
at Cecil College.
#2 The Bank for International Settlements
is warning that global lending is contracting at the fastest pace since the
financial crisis of 2008.
#3 Unemployment in the eurozone has hit a brand new
all-time record high.
#4 The government of Portugal has just
announced that it will be bailing out three major
banks.
#5 Many U.S. banking stocks are being hit
extremely hard. For example, Morgan Stanley stock has declined by 40 percent
over the past four months.
#6 Yields on Spanish debt and yields on
Italian debt have been absolutely
soaring.
#7 10 year U.S. Treasury notes hit a record
low on Friday because investors are scared and they are looking for safety. The
following is from a recent USA Today
article....
"Treasuries are at 1.46 because people
are freaking out," says Mark Vitner, senior economist at Wells Fargo
Economics.
#8 New orders for factory goods in the
United States have declined three times
in the last four months. That is a sign that the "economic
recovery" in the U.S. has clearly stalled.
#9 U.S. job growth in May was well below
expectations and the unemployment rate has increased to
8.2 percent.
#10 Economies all over the developed world
are seriously slowing down right now. The following is from a recent
article by Ambrose
Evans-Pritchard....
Brazil wilted in the first quarter. India
grew at the slowest pace in nine years. China’s HSBC manufacturing index fell
further into contraction in May, with new orders dropping sharply and
inventories rising.
#11 Stocks in Japan hit a 28 year low on Monday.
#12 Over the past five years, the stock
markets of Greece, Spain, Italy, Portugal, Ireland and Cyprus have all fallen by more than
50 percent. Will we soon see similar results all over the rest
of Europe?
#13 The Greek economy is literally shutting
down. Just check out the chaos that unpaid bills are already causing....
And unpaid bills are now threatening Greece’s
electricity supply. State-owned Electricity Market Operator (LAGIE), a clearing
house for power transactions, hasn’t paid independent power producers for
electricity it bought from them. They, in turn, haven’t paid their natural gas
supplier, Public Gas Corporation (Depa), which now doesn’t have the money to
pay its supplier. Payment is due on June 22. Alas, its supplier is Gazprom in
Russia, and they insist on getting paid. If not, they will shut the valve, and
Depa won’t get the gas to supply the independent producers, which will have to
take their power plants off line, removing about a third of the country’s
electricity production.
#14 It is estimated that there are 273 billion
dollars of failed real estate loans in the Spanish banking system.
#15 In March, 66 billion
euros was pulled out of Spanish banks and sent out of the
country. That was an all-time record and that was before we even knew the
results of the recent elections in Greece and France. The numbers for
April and May will almost certainly be even worse.
#16 The unemployment rate in Spain is 24.4 percent
and for those under the age of 25 it is over 50 percent.
#17 Former Italian Prime Minister Silvio
Berlusconi is warning
that Italy may have to take drastic actions if something is not done soon....
"People are in shock. Confidence has
collapsed. We have never had such a dark future," he said. Indeed, the
jobless rate for youth has jumped from 27pc to 35pc in a year. Terrorism has
returned. Anarchists knee-capped the head of Ansaldo Nucleare last month.
Italy’s tax office chief was nearly blinded by a letter bomb.
"If Europe refuses to listen to our
demands, we should say 'bye, bye’ and leave the euro. Or tell the Germans to
leave the euro if they are not happy," he said.
#18 It now looks like Cyprus is going to be
the next European nation to need a
bailout.
#19 Switzerland is threatening to implement
capital controls in order to stop the massive flow of money that is
coming in from banks around the rest of Europe.
#20 As I wrote about the other day,
World Bank President Robert Zoellick is warning that "the summer of
2012" could end up being very similar to what we experienced back in
2008....
"Events in Greece could trigger
financial fright in Spain, Italy and across the eurozone. The summer of 2012
offers an eerie echo of 2008."
#21 Germany’s former vice-Chancellor,
Joschka Fischer, is warning
that the entire EU could fall apart over this crisis....
"Let’s not delude ourselves: If the
euro falls apart, so will the European Union, triggering a global economic
crisis on a scale that most people alive today have never experienced"
When was the last time that we saw so much
bad economic news come out all at once?
2008 perhaps?
We truly live in unprecedented times.
It will be exciting to watch what happens,
but it is also important to keep in mind that the coming economic crisis will
cause extreme pain for millions upon millions of people.
For example, the suicide of a mother and a
son due to the deteriorating economy has absolutely shocked the entire
nation of Greece....
A 60-year-old Greek musician and his
91-year-old mother jumped to their deaths from their 5th floor apartment,
driven to despair by financial woes. This double death is the latest in a
rising epidemic of crisis-induced suicides in Greece.
Witness accounts vary – some say the
mother, who suffered from Alzheimer’s, jumped first, screaming a prayer as she
plummeted to her death. Other neighbors say the mother and her son jumped
together, holding hands.
But the one thing everyone seems to agree
on is that the family had been struggling for a long time. The night before,
Antonis Perris posted a suicide note of sorts on a popular Greek forum, saying
he had no way of resolving the family’s financial issues.
“The problem is that I didn’t realize that
I would need to have cash, because the economic crisis came so suddenly. Even
though I have been selling our possessions, we have no cash flow, we have no
money to buy food anymore and my credit card is maxed out with 22% interest
rate.”
Perris continued to say that both his and
his mother’s health deteriorated, and that he saw no solution to his most basic
problems – getting food and medical help.
This is why it is so incredibly important to get
prepared.
You don't want something like that
happening to you or anyone in your family.
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